Development is one of the basic principles of humanity and one of the basic elements for building a better future. Sustainable development is based on meeting the existing needs of humankind without compromising this opportunity for future generations to meet their needs. Since humanity shifted its focus from surviving to prosperity, this ideology has become the foundation of many industries around the world including urban planning and the urban economy. Sustainable development is based on three pillars: environmental, economic and social. The environmental dimension aims to reduce the negative impact of extraction of natural resources, energy production and consumption. At present, sustainable urban policies in the Northern Europe lead to synergy effects among environmental, economic and social dimensions. The research describes the theoretical framework of the concept of sustainable development, as well as analyses global sustainability policies. The obtained results form an idea of the current situation in relation to sustainability policies in Latvian municipalities. Based on the performed analysis, the authors identified the main criteria for the development of a sustainable energy action plan of the municipalities in Northern Europe.